The U.S. Small Business Administration has released a form of one page that simplifies the application for forgiveness of Paycheck Protection Program loans. It also includes newly revised forms that comply with the current stimulus law.
Congress approved the COVID-19 relief package last month, which offered $284 billion in funding to small businesses that needed loans. This money was used to reduce the economic burden of the coronavirus pandemic. The law required that the SBA release simplified forms within the first 24 hours after the bill’s passage into law. This is to facilitate the application for forgiveness. It also included conditions that would encourage banks in the community to lend more particularly to minority-owned businesses who were unable to obtain loans last year.
Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs and wrote that the Small Business Administration fulfilled the obligation to issue the one-page PPP form loan forgiveness within 24 hours of the date of the enactment of the Consolidated Appropriations Act, 20,21. The article was posted on the Current Federal Tax Developments blog of Kaplan Financial Education. “The agency also issued updated forms.”
Forgiveness terms in the first draw of PPP loans
Substitute Teacher Loan Forgiveness – For eligible borrowers, First Draw PPP loans are eligible for loan forgiveness. This is when the loan payment is made within an 8 to 24-week timeframe.
- The levels of compensation and employee pay are kept at a constant level.
- The loan proceeds are used on payroll and other expenses that are eligible and
- A minimum of 60% of the profits are spent on payroll costs
Second Draw PPP Terms of Loan Forgiveness
Second Draw PPP loans to qualified customers are qualified for loan forgiveness when the loan is repaid within an 8– to 24-week time frame.
- The First Draw PPP loan requires that the employee and compensation levels are maintained in the exact same way.
- The loan funds could be used to pay payroll costs or other expenses that are eligible.
- Minimum 60% of funds go to the cost of payroll
- How do I apply for loan forgiveness , and when
Once all of the loan’s proceeds have been used the borrower is eligible to be forgiven. The borrower can request forgiveness any time up to the maturity date of the loan. Borrowers who don’t request forgiveness within 10 month of the end date of the loan are eligible to receive loan payments from their PPP lender.